The electric vehicle (EV) market is all set to expand rapidly at the global level in the upcoming decade. The shift towards clean energy solutions will accelerate on the back of government support and associated subsidies.
This trend should benefit several ancillary industries including EV charging, making companies such as Blink Charging (BLNK) and Volta (VLTA) attractive buys right now. A report from Mordor Intelligence forecasts the global EV market to touch $166 billion in 2026, up from $34 billion in 2020, indicating an annual rate of 31% in this period.
We can see that Blink and Volta have enough room to expand their top-line in 2022 and beyond. But which stock should be part of your portfolio right now?
The bull case for Blink Charging
Valued at a market cap of $1 billion, Blink Charging owns, operates, and provides electric vehicle or EV charging equipment as well as networked charging services in the U.S. It offers residential and commercial charging equipment allowing drivers to recharge vehicles at various location types.
The company also provides a cloud-based system that maintains and tracks Blink’s charging stations in addition to payment processing and back-end operations. In the last three years, Blink Charging stock is up over 1,000% but is also trading 61% from all-time highs.
At the end of Q3, Blink Charging sold or deployed 18,730 chargers. Around 7,200 chargers are part of the company’s network while the rest are residential chargers. It derives sales from the sale of charging equipment, charging services as well as network fees. In Q3, product sales accounted for 75% of total revenue.
Blink owns a significant portion of the charging stations enabling it to control the pricing of related services. Analysts tracking the stock expect sales to touch $33 million in 2022, up from just $6.23 million in 2020. However, its loss per share might also expand to $1.46 in 2022 from $0.59 in 2020.
The bull case for Volta
Volta is also valued at a market cap of $1 billion and its shares have declined by 36% since its IPO in 2020. It operates a network of smart-media-enabled charging stations in the U.S. It has already installed over 2,000 chargers across 26 territories and states in the country.
However, investors should note that Volta generated 87% of total Q3 sales from its behavior and commerce business which provides ad content across its network of charging screens. Alternatively, revenue from its network development business fell by 47% as fewer customers purchased the company’s products.
Volta reported sales of $8.7 million in Q3 which was an increase of 77% year over year. But its net loss widened to $43.1 million compared to just $14.5 million in the year-ago period.
Volta is forecast to report sales of $32.83 million in 2021 and sales might touch $90.3 million this year. Its adjusted loss might also narrow to $0.72 per share in 2022 from a loss of $1.41 per share in 2021.
We can see both Blink and Volta are expected to grow top-line at a brisk pace in the next few quarters. However, I believe Blink is currently a better investment. That’s because although Blink is valued at a higher price to 2022 sales multiple, it’s gaining traction in the charging segment. On the other hand, Volta is dependent on its secondary business to generate a majority of sales which does not bode well over the long-term, especially if it continues to see charging revenue decline going forward. Blink is also looking to diversify its revenue stream by entering the digital ad business, which should enhance growth.
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BLNK shares were trading at $22.94 per share on Monday morning, down $0.76 (-3.21%). Year-to-date, BLNK has declined -13.47%, versus a -3.74% rise in the benchmark S&P 500 index during the same period.
About the Author: Aditya Raghunath
Aditya Raghunath is a financial journalist who writes about business, public equities, and personal finance. His work has been published on several digital platforms in the U.S. and Canada, including The Motley Fool, Finscreener, and Market Realist. More...
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